Map your GTM options

When I meet with young startups there is one thing that often springs to mind on the commercial side:

The tendency towards picking a business model on the shelf, often inspired by what others are doing, and settle on that as the model going forward without much further thought than that.

The reasoning seems to be that since others have chosen it (and some perhaps even succeeded with it) it will probably also be good enough for this startup. Plus you get the feeling that you have achieved something and can cross off a to do-item from your long list.

I think this approach is premature and may actually be damaging for the prospects of the startup in the long run.

Because what if the model doesn’t work? Do you just pick another then and repeat the same process? And what if the model, you have chosen, puts investors off because it’s too complex, hard and time consuming to succeed?

Forget about just picking a more or less random business model (I know, it’s not entirely random, but I am sure you get my point, ed.).

Map your go-to-market options out instead, as they relate very closely to a viable business model going forward.

Do a mind map. Put your end user/customer in the center. And then start mapping the various ways you can close a sale with that customer using different models, approaches and value propositions.

Figure out what needs to be true – the key assumptions – for each of the avenues and test the assumptions with customers, experts etc.

With a bit of luck and quite a lot of work you will be able to define the path of least resistance to the customer and notably to the customers wallet.

And that’s exactly what you need. That’s your future business model. Developed and understood by you, so you can effectively go and execute on it. Not something just taken from a shelf that you actually may have very little idea about how to make work for you and your startup.

(Photo by Tom Ramalho on Unsplash)

What’s the right price?

There are a number of fundamental questions in business, and one of the most fundamental ones to any business is the one of what to charge for your product?

Clearly there is not one 100% correct answer for that question as it always depends on a lot of different things. And yes, pricing is a science in itself and super hard to get right. But there are a few simple considerations to at least get you started.

They are: Cheap But Expensive, Optimum and Expensive For Good Reason.

The Cheap But Expensive option is the starter option. Yes, it will cost the customer less than the other ones, but in reality it is priced in a way to ensure, (1) you get your starting costs covered and (2) there is every incentive to upgrade to a more expensive solution.

Think of this as the small but overpriced ice cream cone that really just screams you were too cheap to get a bigger one.

The Optimum price point is where the offer makes financial sense compared to the value you’re getting as a customer. Yes, you pay, but you also have a pretty good understanding of why you are being asked to pay what you’re being asked. It can be a super hard point to reach and get right, but this is where you want to be also for the sake of customer retention.

Going back to the ice cream cone example from above this is where the ratio between price and the scoops of ice, you get makes sense, and where you think the value is good enough that you also with a happy heart buy for your friends and family.

The final price point – the Expensive For Good Reason – is the where customers demands more of you, and you basically say “Ok, but it’s going to cost you then”.

This is a scary point for startups because it’s usually here where pilot customers, who haven’t really paid that much (if anything), and which the startup needs to prove its case to investors, reside; putting huge demands on the team for promised service, support and updates for very little if any return.

This is the price point where it’s ok to be greedy as a startup and consider that if a customer is asking too much, you can do the same in terms of asking for more money. Yes, you risk losing the customer, but if it was essentially making a loss, you’re in 99,5 % of all cases better off without it anyway.

At the ice cream vendor this is where you as a customer just want an obscene amount of ice cream in your cone, and you’re just billed accordingly. A totally fair exchange of value.

So in summary: Getting pricing right is super, super hard, but if you have more price points than one, you will want 3 price points:

A low price point that covers as much of your cost as possible and provides a clear upgrade incentive,

A middle one that scales well (“Most Popular Option”, as it’s often called),

And one for special requirements, where you basically ensure you get very well compensated for going out of your way to satisfy a very needy customer with their special needs – without getting distracted from your strategy and roadmap to support it.

(Photo by Angèle Kamp on Unsplash)

Dangerous cuts

There is an element of truth to the argument that when asked to make something better it is just as viable to remove something as it is to add more. Albeit harder.

Having said that you need to be careful when you remove something and perhaps even cut back in the process:

First of all you’re relying on your teams ability to change habits and remove the same processes or elements as you suggest. Habits are a tough thing to change so don’t count on it being super easy.

Second, you’re banking on an increased ability to focus on what matters while leaving everything else aside. It is a bit tied to the above, but it still says something about the mental state of your team once you have made the change. It needs to be the right one and persist.

Third, by cutting you’re also in a way removing future options. You’re banking on making the right cuts in order to where you need to go from here. What if the underlying assumptions are wrong and you need to move in a different direction again? Will you be able to?

The above is not so say that it’s a bad idea to innovate by cutting. You just need to be fully aware that if you go down that right, the decision to do the cutting will be by far the easiest part of the transition.

(Photo: Pixabay.com)